After bankruptcy, you will certainly be bombarded with offers for credit cards after bankruptcy. These credit card offers may even have “guaranteed approval,” making them enticing for people trying to build credit after bankruptcy.

But beware! The banks are failing to disclose a critical fact: Some credit cards after bankruptcy will hurt your credit score!

If you have been through a bankruptcy, you are probably interested in building credit after bankruptcy. And the first rule of repairing credit after bankruptcy is to open new lines of credit.

However, many of these credit card offers will be for subprime credit cards. These credit cards have so many user fees attached to them that the cardholder’s balance immediately becomes too high to start rebuilding credit after bankruptcy.

Let’s take a look at a typical subprime credit card. In this example, imagine that the credit card has a balance of $600 and an interest rate of 29.99 percent, typical for credit cards after bankruptcy.

Now let’s take a look at the fees associated with this credit card. On a $600 limit, the fee to open the account could be as high as $150!

But the credit-scoring bureaus award the highest credit scores to people whose balances are less than 30 percent of the limit. This balance-to-limit ratio is called a “utilization rate.” On a card with a $600 limit, the balance should never be more than $180 to maintain the 30 percent utilization rate.

If the fee to open the account is $150, a person’s balance on the credit is already 25 percent the limit. And this doesn’t consider other fees like interest rates, annual fees, and the like.

And of course, the minute the cardholder makes a single purchase, the balance on a subprime credit card is probably pushed over that 30 percent utilization rate.

If you are looking for credit cards after bankruptcy, your best bet is to apply for secured credit cards. Though secured credit cards require a deposit, the best ones do not charge fees that cause the balance to exceed 30 percent.

Fortunately, we have researched all the secured cards out there. These are the best credit cards after bankruptcy. Remember the basics of building a credit score using credit cards:

1. Do not open retail account.
2. Keep your credit card limits no more than 30 percent of the balance.
3. Pay your bills on time.
4. Keep three to five active credit cards.

If you have any questions about credit cards after bankruptcy, be sure to attend our teleseminar, where we disclose all sorts of other dirty tricks the banks use that suppress a person’s credit score!

We recommend you apply for each of the following Secured Credit Cards in this order. Please consider three things before applying:

1) Apply for these credit cards immediately – do not put this off! The longer you wait to apply, the longer it will take to raise your credit.

2) If you are married DO NOT apply for credit jointly with your spouse. You should each apply for three cards, you and your spouse. This way, you will build joint credit files which will protect you in the long run.

3) Apply for all three at the same time, this will help with your credit improvement.

Public Savings Bank Secured Visa Card

• Build credit history – reports to all 3 major credit bureaus
• 0% APR on all purchases for the first 6 months
• No annual fees or monthly maintenance fees
• No credit check
• No checking account required
• Your credit is not a factor!
• Choose your initial credit limit from $300-$2000
• Lifetime credit lines up to $5,000
• Free fraud protection against unauthorized use
• Use the card everywhere you see the Visa logo

Apply Now!

Orchard Bank Secured Visa Card

• Reports to 3 major credit bureaus monthly providing you the opportunity to rebuild your credit score!
• Acceptance at millions of locations worldwide, including website purchases and reservations
• Your account information is updated and at your fingertips 24/7 so you can manage it your way
• Email and text messages to remind you of your upcoming payment due date with online enrollment
• On-call customer service representatives to assist you with questions or concerns

Apply Now!

Orchard Bank Secured MasterCard

• An excellent credit card for rebuilding credit scores; reports to 3 major credit bureaus monthly!
• Acceptance at millions of locations worldwide, including website purchases and reservations
• Your account information is updated and at your fingertips 24/7 so you can manage it your way
• Email and text messages to remind you of your upcoming payment due date with online enrollment
• On-call customer service representatives to assist you with questions or concerns

Apply Now!

While married, Josh co-signed on a car loan for Stephanie. Stephanie also added Josh as an authorized user to two of her credit card accounts.

The couple then divorced. Six months later, Stephanie started experiencing financial problems. She was late on her car payments, as well as her credit cards. Then Stephanie declared bankruptcy. Though the vehicle was not included in the bankruptcy, the credit cards were.

Unfortunately, Josh was still a co-signer on the car. And he was still listed as an authorized user on the credit card accounts.

So now Josh had late payments from the car and credit cards on his credit report. He was suffering from Stephanie’s financial meltdown, and from her bankruptcy. Stephanie now wanted to correct the problem she caused by learning how to repair credit after bankruptcy.

Fixing the authorized users shouldn’t be a problem. All Stephanie had to do was call the creditors and explain that Josh was not to be listed as an authorized user on those accounts anymore. But the car was a bigger problem. I explained that by co-signing, Josh had made an agreement with the banks. He agreed to be responsible for paying the car in the event that Stephanie could not. Josh and Stephanie were learning an important fact about divorce and credit scores: Divorce does not nullify an agreement with a bank.

If Josh wanted to repair his credit after Stephanie’s bankruptcy, he was at the mercy of the bank. I explained that he could call the bank and explain the situation, but there were no guarantees that the bank would remove the late payment notices.

The moral of the story is this: If you are divorced, split your credit apart! Refinance all loans. Cancel joint credit cards, or have them transferred into one person’s name. Remove your name as an authorized user on your ex-spouse’s accounts, and remove your ex-spouse’s name from your accounts. Learning how to repair credit after bankruptcy is hard enough without adding an ex into the mix!

1. Highlight your strengths.
2. Explain what happened.
3. Be willing to compromise.

In this week, we will look at three more tips about renting and credit checks.

Renting and Credit Checks Tip #4: Add a 100-word consumer statement to your credit report.

A consumer statement, also known as a summary explanation, is basically a note from you that creditors see when they pull your file. Of course, they will see the bankruptcy facts on your credit report; if this bankruptcy was caused by a medical condition, or other severe circumstance, the consumer statement can be used to explain why your score is low. Let the landlord know to look for the consumer statement and give the documentation proving your case.

Be sure to read my blog about consumer statements to learn how to add this 100-word statement.

Renting and Credit Checks Tip #5: Try to avoid a credit check.

Different landlords have different processes for selecting tenants. Some use a careful selection procedure that require spotless credit, references from previous landlords, and an interview. A landlord who is hungry for tenants will settle for a fat deposit and a mediocre score.

Still others will use a gut feeling, basing their decision by considering the personality and character of the applicant.

Of course, if you approach a landlord and ask if they are running a credit check, you have basically just confirmed your bad credit. Until you know that the landlord plans to run a credit check, you might fare better to keep your bankruptcy facts under lock and key. Instead, look for landlords who are renting rooms in their home or guesthouses as they are less likely to do a credit check than corporate landlords.

When you find an apartment you like, contact the landlord and ask a few questions, such as:

1. Does the property have air conditioning?
2. What is the guest parking situation?
3. What criteria are used to approve tenants for the rental?
4. What is the down payment?
5. Are there any utilities (e.g., water, gardener) included in the cost of rent?

Pay close attention to the landlord’s answer to the question #3. If the approval process requires a credit check, you will have to be upfront about your situation.

Renting and Credit Checks Tip #6: Try to avoid a credit check.

Immediately begin the process to repair credit after bankruptcy. Learn how to improve your credit score so that renting and credit checks are never a problem in the future!

But fear not! This week, we will look at three tips to overcome this obstacle. And be sure to join me next week for Part II: Renting and Credit Checks.

Renting and Credit Checks Tip #1: Highlight your strengths.

If you make a great salary or have a lot of money in savings, let the landlord know. And if you have a spotless record of making your rent payments on time, be sure you get a letter of recommendation from past landlord. Give the new landlord canceled copies of your old rent checks (dated no later than the first of the month).

Renting and Credit Checks Tip #2: Explain to your landlord what happened and how you will fix it.

If you know the landlord is going to run your credit, be upfront about your bad credit. Do not make excuses. Simply explain your situation and how you have changed your behavior accordingly. If you also show the landlord your bank statements and your budget, the new leaf you have turned over might impress the landlord.

Renting and Credit Checks Tip #3: Be willing to compromise by making a larger deposit or paying a little extra in rent.

Consider the situation from the landlord’s perspective. Your credit score was designed to tell the landlord how likely you are to default. If your credit score is low, your landlord considers you high risk. And evicting someone can take months, so your landlord might be reluctant to lease a home to a high-risk person. Making a larger deposit or paying several months of rent upfront can offer your landlord some security.

And if your family members are welling, you might also offer to find a cosigner who can vouch for you.

Be sure to come back next week for three more tips in Part II: Renting and Credit Checks.

Marriage and Credit Consideration #4: Leverage Your Spouse’s Credit Score

Is your credit bad? Consider the bankruptcy facts. If you went through a bankruptcy prior to meeting your spouse. Perhaps you lost a job and were late on payments. Or maybe you experienced a foreclosure or repossession.

In any case, some spouses have poor credit and need to take drastic steps to quickly build their credit scores.

Here’s a great strategy: let’s say you have a subprime credit score, and your spouse has a good score with a lot of available credit. You can transfer some of your debt to your spouse’s name. At a later date, when your credit score begins to improve, you can call your credit card company, ask for a higher limit and a lower interest rate, and then transfer debt back into your name.

This is the last of my marriage and credit considerations. Considering these approaches will help you not only preserve your credit score but also position your marriage for financial opportunities!

In this post, we talk about the third consideration of marriage and credit.

Marriage and Credit Consideration #3: A Wise Approach to Mortgages

Though applying for joint credit cards can hurt a person’s credit card score, I often suggest applying for mortgages as a couple. In two-income households, this allows the couple to qualify for a much larger loan, so long as each spouse has a strong credit score. (See Marriage and Credit Consideration #2).

That said, keep in mind that this strategy can wreak havoc if you separate or divorce. To protect your credit score during divorce, you will need to refinance the home in just one person’s name

And if you can qualify individually, you might want to consider financing a home in one spouse’s name only, especially if either of these scenarios is true:

1)    You and your spouse own several investment properties or plan to own several investment properties in the future. If this is the case, having joint mortgages is not preferable. Most lenders only allow an individual to have four mortgages. If you and your spouse separated your mortgage loans, you could own a total of eight properties.

2)    Once spouse has bad credit. When qualifying for a home loan, both spouses’ credit scores will be evaluated, and the interest rate will likely be based on the lower of the two scores.

Applying individually comes with a certain amount of risk. Your spouse has no credit incentive to make the payment. If you are relying on your spouse to make half of the payment, and your spouse falls through on his or her obligation, your credit will be damaged, but your spouse’s credit will remain pristine.

In my next post, I will reveal the final of four marriage and credit considerations.

In this post, we talk about the second consideration of marriage and credit.
Marriage and Credit Consideration #2: Who Holds the Credit?

Sometimes a couple makes the mistake of opening all the credit cards in one spouse’s name. In this case, the couple may be in for problems, especially if they apply for a mortgage together. If you hold all credit in your name, your spouse has no credit. And no credit is just the same as bad credit. Without a history of credit, your spouse will have a low credit card score because the credit-scoring bureaus will have no way of knowing whether your spouse can handle credit. Your spouse’s bad score could endanger the loan or force you to sign a loan with a high interest rate, even if you have a superb credit score. For couples that want to put both of their names on the title deed, this can be problematic and expensive.

The solution to this marriage and credit dilemma? Make sure you both build credit. Hopefully, you will never experience divorce, but if you do, having your own strong credit score will certainly come in handy!

Marriage and Credit Consideration #1: Joint Credit Cards

Though many couples are tempted to open joint credit card accounts, resisting this temptation has benefits. In the case of financial crisis, consider what would happen to each of your credit histories should you stop making payments on a joint account—both will be tarnished, but if you keep all accounts separate, you can be strategic about forthcoming financial disasters.

Let’s say your spouse loses a job, and you know you can afford to pay the bills only for a couple of months. You can transfer all of your credit card debt into your spouse’s name before you become delinquent. Hopefully, your spouse can find another job quickly, at which point your spouse will transfer your debt back into your name. But if not, you are positioned to protect your credit.

When the money runs out and you are unable to pay the bills in your spouse’s name, your spouse’s credit will suffer. Yours, however, will be protected. This means that you can continue applying for credit cards and loans while your spouse works on rebuilding credit.

Though this might seem like you are hanging your spouse out to dry, this is not the case. If you have a high credit score, your entire household can benefit from the loans you take out. And consider the alternative: if all of your accounts are jointly held, you will both end up with bad credit, and neither of you will qualify for loans during a transitional period.

Does that sound familiar? Just about every major department, clothing and electronics store has a promotion aimed at getting people to sign up for a store-specific credit card. But what you don’t know about retail store credit cards could hurt your wallet and your credit score.

One of the best ways to earn a high credit score is to responsibly manage three to five revolving lines of credit, which include your major credit cards (Visa, MasterCard, and the like) as well as retail store credit cards, which are credit cards affiliated with a store like Gap or Chevron. Having three to five credit cards allows the credit bureaus to tell whether you can manage multiple accounts at a time. If you do not have at least three cards, they do not have enough information about you to tell whether you are reliable or not. On the other hand, if you have fifteen credit cards, they know that you could quickly get in over your head by racking up huge credit card bills you are unable to pay.

In the words of Goldilocks, three to five is “just right.”

But retail store credit cards pose a couple of risks to this three-to-five rule.

1. First, keeping retail store credit cards active can be tough. You cannot buy a washing machine from Sears each month, so the card might go inactive. Inactive cards don’t tell the credit-scoring bureaus anything about your ability to manage debt, so they do not allow your score to increase.
2. If you are limited to no more than five revolving credit cards, why waste one on a card that will only be accepted by one merchant? You cannot book a plane ticket using your Old Navy credit card (but you can purchase an Old Navy shirt using a MasterCard). Too often, people apply for these credit cards each time they are offered a discount, but they must also use Visa, American Express, MasterCard, and Discover cards for traveling, meals, and other expenses. Soon, they find themselves with more than five credit cards.

And there is another downside to consider. Many stores promote their store-specific credit cards by offering a 10 or 15 percent discount on same-day purchases if you open an account. Keep in mind that this is a one-time discount only.

Let’s do the math and see how this adds up. Imagine that you are buying a pair of $60 jeans from the Gap when the cashier tells you that you will get 10 percent off your entire purchase—$6—if you open a Gap credit card. You figure it is a wise move, so you sign up on the spot.

Consider all the downsides:

• I should take advantage of this offer, you might think, piling a few more items in your shopping cart. Sure, you “saved” 10 percent, but you also just made a rash decision to splurge on things you probably do not need.
• You have added a credit inquiry to your credit report. Credit inquiries count for 10 percent of your credit score, so your score drops a few points, which could cost you hundreds of dollars a month when you apply for a mortgage.
• If you do not pay this and subsequent bills immediately, you will have to pay interest
• Ever heard of retail therapy? Having credit cards in your wallet strengthens your ability to make emotional buying decisions by creating opportunities for you to charge things you do not need.

In other words, that $6 you “saved” just cost you a bundle.

Still not convinced? Think of it this way: Why would retail stores promote these cards with discounts unless they know they can eventually make money off the retail store credit cards?